Category Archives: Liechtenstein

(Bloomberg) — Prince Hans-Adam II von und zu Liechtenstein
lives in a castle perched on a cliffside in the Alpine
principality that bears his name. He’s known as “Your Serene
Highness” to the country’s 38,000 citizens, and he owns a
collection of Renaissance masterpieces, as well as two palaces
in Vienna.
He’s also now one of the world’s 500 richest people,
according to the Bloomberg Billionaires Index.
The prince controls a dynastic fortune that originated
during the Crusades and is rooted in LGT Group, a private bank
that caters to the ultra-rich worldwide. LGT’s value has jumped
64 percent this year, more than quadruple the gain of the Euro
Stoxx Banks Index, thanks in part to a 10 percent increase in
net assets. The surge added $1.7 billion to von Liechtenstein’s
net worth, lifting him to No. 444 on the Bloomberg index with
$4.4 billion.
The fortune is the oldest on the index and originated with
land holdings acquired in the 12th century that at one point
were spread across what’s now Germany, Austria, Hungary and the
Czech Republic. They’ve since been whittled down to mainly
timberland and farmland in Austria and are valued by the index
at less than $100 million, a fraction of the land wealth owned
by other noble families who, while not royal, held on to
property acquired centuries ago.
Hugh Grosvenor, the seventh Duke of Westminster, controls a
$12.9 billion fortune derived from hundreds of acres of London
land his family has owned since 1677. Earl Cadogan, who’s worth
$7.5 billion, oversees a huge plot of central London acreage
that has been in his family since 1753.
The only other royal valued by the Bloomberg index, Queen
Elizabeth II, has a personal fortune of about $380 million —
less than 1/10th the size of Hans-Adam’s — as most of the
monarchy’s assets are held in trust for the British people.
LGT claims to be the biggest bank owned by an
“entrepreneurial family” and ended 2016 with 152.1 billion Swiss
francs ($153.8 billion) under management, up from 129.3 billion
francs a year earlier. Private banks, typically more nimble than
their investment-banking brethren, are favored by investors who
see them as less susceptible to the legal and regulatory
constraints.
The bank’s success also mirrors a comeback of sorts for the
mountainous nation sandwiched between Austria and Switzerland,
once notorious for being a tax haven. Liechtenstein abolished
its banking secrecy laws in 2009 and has since sought to re-
brand itself as a specialist private-banking hub. The country’s
banks attracted a record 20.3 billion Swiss francs of net
inflows last year, according to Simon Tribelhorn, director of
the Liechtenstein Bankers Association, almost triple from five
years earlier.
The prince assumed the throne after his father’s death in
1989, becoming the leader of one of the world’s oldest noble
families. After graduating from the University of St. Gallen in
Switzerland, he was tasked by his father with reorganizing the
family empire, which was in shambles thanks to expropriations
during World War II and mismanagement. He shut down unprofitable
divisions and narrowed its client focus to just institutions, as
well as multimillionaires and billionaires.
He also retains influence that neighboring leaders can only
envy. A 2012 referendum to limit the ruler’s power — which
includes the ability to veto popular votes and legislation and
to dissolve parliament — was roundly rejected.

(BBG) The U.K. mustn’t get a better deal with the European Union than non-members who went through the effort of obtaining access to the single market, said Adrian Hasler, the prime minister of the Principality of Liechtenstein.

The country of 38,000, on an area slightly smaller than Brooklyn, nestled between Austria and Switzerland, is one of three nations in the European Economic Area that aren’t EU members. Together with Norway and Iceland, it enjoys EU rights of free movement in exchange for adopting most EU policies, but has little say in drafting them.

“Liechtenstein said ‘Yes’ to the EEA membership 22 years ago to get access to the EU market, and we consciously accepted the duties this entails,” Hasler said in a May 16 interview in Vienna. “The effort is enormous for such a small country. It’s absolutely key for us that this is recognized by the EU and we don’t find ourselves suddenly worse off than the U.K., which turned its back on the EU.”

Liechtenstein, an independent principality since 1806, was once famous for banking secrecy, beating even the anonymity of neighboring Switzerland. It abandoned that status beginning in 2009 after it came close to pariah status during high-profile tax evasion investigations, especially in Germany.

Hasler, who took office in 2013, said those days are irrevocably over since his government signed an agreement with the EU on an automated exchange of tax data, which has been in force since last year and will result in the first exchange of data this fall. The development of the country’s financial industry since the crisis vindicated the policy.

Old Model

“The old business model was lucrative and not something everybody was ready to give up lightly,” he said. “But at the end of the day, the insight prevailed that this old world won’t continue to exist.”

Liechtensteinian banks’ assets under management declined as much as 18 percent through the financial crisis, driven by withdrawals and weak market performance. They rose to a new record level of 235 billion Swiss francs ($240 billion) at the end of last year, Hasler said.

“What we’ve seen is that many clients were interested in disclosing their assets,” Hasler said. “In part, it’s a generational question: Maybe the grandparents were interested in having a nest egg nobody knows about; but today’s generation is more interested in working with the money.”

The principality’s main product for tax-wary foreigners, however, hasn’t stopped declining and for Hasler that’s just as well. The number of unregistered trusts and foundations — whose beneficiaries are listed in documents in escrow and not in public registers — plummeted by 69 percent from the end of 2007 to the end of 2015.

“What’s changed markedly is the trust business,” he said. “There were many trusts and foundations which were meant to hide assets. Today, there are fewer mandates, but they require more complex management. You can see there that the business has changed.”